There are 2 interdependent components that must be systematically looked into, otherwise transformation efforts will not stand on solid ground.
Countless research had already shown that many transformation initiatives fail. For decades, management gurus have looked into the reasons why such transformation efforts do not achieve all the goals they have set for themselves. The estimate is that 50 to 70% transformation fail. Yet despite this statistic, status quo is not an option. The magnitude of uncertainty we are currently facing because of the pandemic demands that we systematically plan for, drive and implement large scale organization change and transformation to ensure that the business can come out of the pandemic stronger and primed for further growth.
In the work that we do with our clients, we have identified that there is a Yin and Yang to transformation that must be prioritized. These 2 complementary forces interact to form a dynamic system and results to a synergistic impact: one integrated whole that is greater than the sum of its parts.
Let’s start with the Yang—the hard, solid, focused part: Strategy. On this, we don’t mean just having clear goals and plans. The more important questions that a CEO must ask are:
What relevant role will we choose to play in our customer’s lives?
What will we choose to do, and NOT do?
The essence of strategy is denial—choosing to do only a few big things because resources are scarcer than ever. We have seen far too many companies who have a long list of initiatives and projects, seemingly with a desire to capture all opportunities and ideas that everyone in the team has identified. During pre-pandemic times—when marketing budgets, CAPEX, OPEX, time, and organizational energy were fairly adequate—this relentless pursuit of all sources of growth and improvement is not unreasonable. However, we now operate under a very drastically different set of circumstances. All budgets have been cut, customers’ wallets are tighter than ever, and importantly, organizational productivity and morale is severely challenged, not just because of internal company factors, but because of the larger anxiety about the pandemic’s impact to health, family, and employment.
Consequently, it is very important to carefully prioritize. This must be the focus of strategy development. Now, if it is so critical to prioritize, how do you determine what those choices should be? This is where the rigor of data, insights, analysis and executive judgement come into play. Strategy formulation can no longer be based on opinions or group think. The previous practice of locking up a team into a feel-good brainstorming activity where everyone gets to throw in their opinion on what the company SWOT is is just not good enough anymore.
A proper data-driven, rigorous yet agile process must be utilized in order to come up with the right strategic decisions. Hard numbers on financial metrics (revenues, costs, profits) and customer data (attitudes, preferences, brand strength) must be systematically and regularly analyzed, and importantly, integrated across all data points to uncover the issues, opportunities and strategic imperatives. Only then can plans be drawn up—confident that the prioritized initiatives will have a high chance of bringing in the much-needed revenues and profits for the company. Here we are not talking about a cumbersome process that takes months to complete, but an agile approach where there is iteration and regular (weekly/monthly) re-calibration of assumptions and plans. And when a shift in strategy (Yang) has been decided on, the complementary Yin must quickly be looked into, to hasten progress towards execution.
Now let’s move to the Yin—the soft, slow, diffused part: Organization. If there is one good thing a crisis brings, it is opportunity. CEOs we have worked with at the start of the pandemic in 2020 realized almost instinctively that evolving the company’s strategy was the opportune time to make radical changes in how it is organized. Asking existential questions such as “Why are we here?” and “Where are we heading?” as part of re-strategizing naturally leads to “How will we get there?” To answer this question, it is inevitable that CEOs and the leadership team confront 4 organizational levers:
Process & People
Coordination & Control
Culture and the Agile Organization
The 4 Organizational Levers
Structure How any organization is organized is central because it is the vehicle to delivering value to stakeholders. As the pandemic set in, leaders immediately felt how their rigid hierarchical organization structures got in the way of faster decision-making. Even companies with defined “decision rights” found themselves resisting old structures to reach out to talent and teams on the ground who are closest to where the action is. To survive the cashflow burn, few organizations, if at all, were spared the painful process of “restructuring” with resulting reductions in workforce. Yet, that is only scratching the surface of opportunity. When the company’s business strategy is very clearly defined, the logical next step is to assess how the organization is configured. This is when leaders ask questions like: “Are we properly organized to deliver on what our strategy demands? In what ways should the reporting relationships change to enable a more agile execution of our strategy? How will the new configuration operate across time and space boundaries?”
Process & People With the shift in strategic intents and imperatives, we now ask “What needs to change in the organization’s work? Which tasks are best done by whom? What are the big tasks and how might these be broken down into smaller units?” When the government declared the lockdown and businesses went on an almost complete stand-still, retail organizations like supermarkets and groceries were among those that were hit the hardest. Those who were able to rapidly pivot their supply chain processes and retool their people from walk-in to an online ordering and delivery system are now the clear survivors.
Coordination & Control Whether the ultimate configuration of the pivoted organization focuses on functional specialization, divisionally revolving around customers, products and services, or the more complex matrix across the former and the latter, the creation of systems and rules of engagement for coordination and control must be reinvented. Questions that beg to be answered include: “How will the required tasks be coordinated so they fit together and achieve the ultimate objectives and goals? Where will the risks of potential misalignments and conflict arise and how can these be mitigated? What new competencies will our people need to learn to deal with complexity and ambiguity? How will information flow to enable quick evidence-based decision-making to those who will make the important calls?”
Culture and the Agile Organization It is at the space between stability and instability—emergence—that innovation is born. And what is emerging and shaping as a required permanent characteristic of organizations in the new reality is the agile organization culture. Why? Because it works. Organizations must be seen not as static mechanical structures but as dynamical living organisms. Central to this migration is the role of the leader who is the primary culture shaper and bearer. The CEO must embody the mindset shift, the search for and definition of a new purpose and world view. He must be first to challenge the status quo, experiment and adapt.
Our transformation work is cut out for us. Despite the looming risk of failing in this effort weighing heavily on any CEO who embrace this challenge, bearing in mind the Yin and Yang of transformation will help ensure that their change and transformation efforts will have solid and well-balanced ground to stand on.
Acumen’s Business Transformation practice help CEOs navigate through the various components of a transformation initiative to get the answers to these questions.
About the Authors Pauline Fermin & Susan Rivera
Pauline Fermin is currently the COO of Acumen Strategy Consultants and head of its Business Transformation practice. She has over 26 years of experience in strategy—both as a corporate executive and as a consultant. She combines her depth of experience in research and marketing with the discipline of finance—applying a broad and holistic view in strategy formulation. She has applied her strategic expertise in helping clients from a wide range of industries, including food and beverage, packaged goods, financial services, pharmaceutical, real estate, retail, telecommunications, transportation, software, and other services.
Susan Grace Rivera has over 3 decades of experience in Human Resources Management, Human Capital and Organization Development Consulting, Executive Coaching and delivering Wholistic Wellness Solutions for People and Organizations.
Previous positions held include:
Managing Director & W.E.L.L. Coach, Talent, Leadership and Change Consulting www.thetlcsolution.com
Founder and CEO, PARTHIA Philippines, Inc. www.parthia.ph
Chief HR Officer - Globe Telecom
Country Manager - Hewitt Associates
Acumen is a consultancy firm focused on strategy, transformation, and capability building to enable higher business performance.